KentuckyWired broadband initiative should focus on unserved areas

By JIM WATERS
Bluegrass Institute for Public Policy Solutions

The Lexington Herald-Leader recently argued in an editorial that because broadband speeds across the entire commonwealth aren’t as fast as Delaware’s, taxpayers should support KentuckyWired, which is former Gov. Steve Beshear’s $350 million scheme.

While the editorial noted that the Federal Communications Commission (FCC) has said download speeds of 25 megabits per second (Mbps) and upload speeds of three Mbps are “necessary” for homes and businesses, those standards are debatable.

Indeed, the FCC’s decision to use that standard was made just one year ago and was enacted on an extremely partisan 3-2 vote. The FCC with the stroke of a pen quintupled the nation’s broadband standard, thus ruling that one-fifth of the nation did not “have” broadband.

However, the FCC just months before its vote had deemed 10 Mbps download speeds and 2.9 Mbps upload speeds fast enough for “high-use” households to stream videos, make video calls and store data in the cloud.

I can assure you that three federal bureaucrats operating out of some concrete building in Washington, D.C., don’t know more than we Kentuckians about what the Bluegrass State needs.

What we know about Kentuckians and their access to broadband services:

• Ninety-three percent have access to wireline broadband service.

• Ninety-nine percent have access to wireless service.

• Ninety-seven percent have access to the download speeds of 10 Mbps that are sufficient for daily online lives.

• We have healthy competition in the private sector. The commonwealth is home to 152 broadband providers.

• Most Kentuckians can choose from more than one provider. In Lexington alone, there are 22 providers and 99 percent of residents have access to broadband.

• Only 162,000 of the Bluegrass State’s 4.4 million residents lack access to broadband.

While bringing affordable, high-speed service to the few residents without access and improving speeds and prices for consumers who already do are worthy endeavors, policymakers must also protect taxpayers and the free market that brings choices, lower prices and increased private investment to Kentucky and its citizens.

Such a balanced approach requires lawmakers to consider whether, in this tough budget year, the commonwealth should devote more than $50 million in state and federal tax dollars while engaging in a risky contract with conglomerate Macquarie Capital and its less-than-stellar record on similar projects elsewhere to build a government-owned broadband network.

Shouldn’t policymakers focus on providing services not covered by the private sector instead of wasting tax dollars on building duplicate infrastructure like KentuckyWired?

Supporters offer no credible evidence that such a big-government broadband network would actually improve outcomes for consumers.

Instead, such a boondoggle likely would harm our economy by chilling additional private-sector investment and thus diminishing choices for customers as KentuckyWired would compete against the multitude of private broadband providers already serving our commonwealth?

Indeed, before taking over as KentuckyWired’s executive director, Steve Rucker in his position as Deputy Secretary of the Department of Finance and Administration, wrote the plan that took a contract away from the private Internet service providers (ISPs) that served our schools and gave it to KentuckyWired.

Do we really want to send the message to private sector job creators that after investing millions of dollars in Kentucky, state government may just come in and take away your business?

State lawmakers instead should search for ways to eliminate barriers to additional investment by private ISPs instead of raiding their customer base, which threatens to drive them, the jobs they support and tax revenues they send to Frankfort out of the commonwealth altogether.

By ending KentuckyWired once and for all, the Bevin administration would accomplish what federal bureaucrats who want to dictate the Bluegrass State’s broadband policy can’t be trusted to do: protect the best interests of Kentucky taxpayers and consumers who pay the bills.

Jim Waters is president of the Bluegrass Institute, Kentucky’s free-market think tank. Reach him at jwaters@freedomkentucky.com. Read previously published columns at www.bipps.org.

-30-